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Selling My Bootstrapped SaaS Business

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Re: Selling My Bootstrapped SaaS Business

#81

Post by troydavis »

tylertringas wrote: post #32
joosters wrote: post #2

...the cash, from selling the business has built momentum for other projects like [...] angel investing, I just knew that would be in there. Why do so many tech people seem to think that VC investment is what they want to be doing once they have spare cash? This isn't a personal critique of the OP, but it just seems so very common in general. I don't understand it.

I use the term "angel investing" pretty loosely here. Not implying picking startups on angelist, but more like small investments in other Micro-SaaS businesses. Still formulating a strategy for investing tbh as it's the first time in my life I've have real captial to deploy, but I feel like I have a better competitive advantage investing in what I know rather than securities

Whether you have an advantage or disadvantage depends on your goal.

If you want a series of potentially-fun lottery tickets in industries and teams you choose, you have an advantage.

If you want any return (and I mean any, as in, recovering any capital), you have 3 huge disadvantages: insufficient diversification[1], a lack of dealflow, particularly great deals, and inexperience evaluating and participating in other people’s startups. These are all surmountable, but doing so is an occupation.

If you don’t already read Matt Levine, the “Retail Traders” section of https://www.bloomberg.com/view/articles/2017-10-09/retail-vo... applies to picking a small quantity of individual startups too. The reason to do it is because it’s fun (and you’re comfortable losing all of the principal), not to earn average risk-adjusted returns.

[1]: Check out 500 Startups’ presentations and posts on how much diversification is required to expect average returns for the asset class. Here’s one: https://500.co/not-so-simple-math-on-venture-portfolio-size/

Re: Selling My Bootstrapped SaaS Business

#82

Post by vinceguidry »

joosters wrote: post #72
charlesdm wrote: post #54

Earlier quoted context omitted.

If you put some time into it and learn how to properly invest, yes. If you made a million today, you probably want to just keep it in an account and wait until a 20%+ correction happens before buying in, though -- it's been quite while since the last significant drop.

Trying to time the market? Good luck with that.

All active investment, unless you're a market maker, is market timing.

Re: Selling My Bootstrapped SaaS Business

#83

Post by webbie917 »

top256 wrote: post #55

imho this article is a good illustration of how business get bought and not sold. The business has to be able to live on its own and be interesting to be bought. But that means you have less reason to sell

Whew... I can think of a long list of reasons to sell a business. Many sell simply because of life events - wanting to spend more time with family, travel, buy a new house, deal with personal health. Running a small business is a 24/7/365 job and you can't just take a month off because you have got a honeymoon or a newborn in the plans.

Accounting (consult your own accountant please0: when you make salary/profit from your small biz you get taxed at ordinary tax rate (up to 40% in the US) where is when you sell biz as assets you may be taxed at capital gain tax rate (0%-20%) which is a financial advantage - like you get paid 3-4 years ahead. Again, consult a professional on this.

You could have other ideas or projects you want to work on, but unable to because your business is your 100% priority and has been for too long.

You might not want to deal with hiring a team because that's the stage your business is at - too big for you to handle on your own or you don't want to work 60-hour weeks anymore.

I could just go on and on, but a combo of 2-3 of these will certainly make the thought of selling quite appealing to many.

Re: Selling My Bootstrapped SaaS Business

#84

Post by kdscruggs »

hahla wrote: post #4

I buy bootstrapped businesses. Email in profile. Shoot me a message would be happy to discuss even if its just to chat. I don't ask a lot of questions, have numerous references, and I have been buying for the last 10 years.

Sent you an email regarding an ecommerce site I have for sale.

Business aside, I'm interested in picking your brain about your line of work. Always fascinating to speak to people who are doing cool stuff. Keep up the good work.

Re: Selling My Bootstrapped SaaS Business

#85

Post by imhoguy »

charlesdm wrote: post #12
nathan_f77 wrote: post #10

> Purposefully under-optimize > For example, I really do not understand paid search advertising (Google Adwords, Facebook, etc) so I purposefully put almost no effort into it as a customer acquisition channel for Storemapper. This article is awesome and super helpful, but that particular point seems like terrible advice. Surely it would be much better to hire a marketing/adwords contractor, and increase the value of…

Maybe he just preferred having a healthy amount of money in the bank, and the multiple was worth it? Having $500k - 1m brings decent peace of mind, even if it was a nice business.

Exactly as author mentions the risks and the focus in the article. Future, especially in IT and ecommerce, is unknown and next month some mamoth competitor or smart copycat can step into his market.

Re: Selling My Bootstrapped SaaS Business

#86

Post by kdscruggs »

KGIII wrote: post #27
danieltillett wrote: post #15

Earlier quoted context omitted.

I "invest" in new startups because I want to help the next generation. I put invest in quotation marks because I don't expect to make any money (I will be happy if I break even), but I do want to give back and create the environment that I never had access to. I know others feel the same.

Some of my investment is to empower people that I like. Some is just to help them over a temporary financial hurdle. Some is more like a gift than an expectation of a financial reward and, honestly, a loss is the expected outcome. I'd also add something to the general topic. I never expected to sell my company and I think that actually helped. I drew a salary and kept my finances distinct from the legal entity that w…

Congrats on the sale! Very noble of you, big fan of your approach. Ultimately, my goal is to eventually do the very same (give good people their chance to flourish and create good business).

Have you seen any correlation to the "no pressure"/generous aspect of your investments to the success or failure of said investment? My feeling is that the lack of stress attached to the investment may make it easier for the founder to achieve their goals. No anxiety about failure to pay you back = no self fulfilling prophecy. Probably depends on the founder.

Re: Selling My Bootstrapped SaaS Business

#87

Post by tylertringas »

sparrish wrote: post #62
joosters wrote: post #2

...the cash, from selling the business has built momentum for other projects like [...] angel investing, I just knew that would be in there. Why do so many tech people seem to think that VC investment is what they want to be doing once they have spare cash? This isn't a personal critique of the OP, but it just seems so very common in general. I don't understand it.

Seems a bit ironic that a successful bootstrapped business owner would want to do angel investing.

Appreciating the good discussion here around "angel investing" which I broadly agree with depending on how you define it. Just want to clarify that for me personally, I meant just investing in early-stage businesses in creative ways; not VC, moonshot, whatevers. In the run up to launching many failed businesses prior to Storemapper I accumulated nearly $60k in credit card debt, which functioned more or less like an angel investment from Chase et al. I think there are lots folks who could build a good business but don't have access to even that level of "capital" or don't want to take that kind of risk and might instead look for an "angel" investment. Maybe. Still early in formulating a strategy to be honest. (further reading if you're curious: https://tylertringas.com/debt-free/)

Re: Selling My Bootstrapped SaaS Business

#88

Post by tylertringas »

le-mark wrote: post #79
tylertringas wrote: post #30

Hi folks. I'm the OP here. Hit me up if you have any questions.

Go to Conferences ... I only reached a critical mass of serious acquisition offers after attending my first Micro-Conf in Las Vegas. Just curious, what types of activities did you do at MicroConf? Did you speak/present? Did you attend sessions (which ones)? Did you just talk to people and network? How did you plan to approach people at the conf? What worked, what didn't? I once paid to attend an industry conference f…

Didn't speak. Just walked and talked. I spent a lot of time at conferences in a previous job and no longer get massive anxiety from it. Two things that make going to conference better: 1) Build a reputation online before (blog, tweet, be transparent) (2) get a speaking slot if at all possible b/c then people come speak to you.

Re: Selling My Bootstrapped SaaS Business

#89

Post by HeyLaughingBoy »

ProblemFactory wrote: post #22
cultvoid wrote: post #17

Earlier quoted context omitted.

In my experience, hiring a marketing/adwords contractor is the very easiest way to transfer cash out of your business and into somebody else's business, with no discernible value gained. I'm sure there are some hotshot marketing/adwords contractors out there...and unicorns probably exist also.

The "problem" with SEO and adwords consultants is that the good ones would be working for the most lucrative verticals: insurance, consumer finance, medical lawsuits, etc. If your small SaaS business can afford to hire them, then they aren't worth hiring.

You can say that about literally anything and have it be false. Simply because someone/some company is amazing at what they do, does not mean they are priced out of reach or otherwise unavailable.

Re: Selling My Bootstrapped SaaS Business

#90

Post by danieltillett »

csa wrote: post #71
danieltillett wrote: post #16

Earlier quoted context omitted.

... and what revenue multiple do you pay?

> ... and what revenue multiple do you pay? I'm trying to figure out if you're just being a jerk here, or whether you are genuinely curious about a question with a wide range of acceptable answers. I hope it's the latter. Market rates are typically something between 2x and 5x some sort of revenue or profit measure. That said, the price can go over 5 if there is a big strategic advantage to be had. Conversely, the mul…

No I am asking a genuine question. My experience is all buyers want to pay 1x to 1.5x of the after tax profit after some massive owner salary has been subtracted.

From a financial perspective it almost never makes sense to sell unless you have to get out today. If you have a good business that is earning good money then just run it out for cash. At worst take your best employee, give them 10% of the business, and let them run it.

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